Missing Pieces: Development’s Drivers, Global Growth Assessment, and More
June 18, 2012
A view of Nogales, Mexico is seen from Nogales, Arizona, April 28, 2010 (Courtesy Reuters).
Charles Landow highlights two scholarly papers, a World Bank report, and events in Venezuela in this edition of Missing Pieces. Enjoy the selection.
- Development’s Drivers: With researchers looking ever further in time and scope for the ultimate drivers of development, a paper from the National Bureau of Economic Research (NBER) surveys current thinking. It argues that the people who occupy a territory, rather than the physical characteristics of the territory itself, matter most for long-term prosperity. Apparently critical is “genetic distance,” or the degree of relatedness between two populations. At greater genetic distance from the group at the global technological frontier, “differences in values and norms, mistrust,” and other factors stymie the adoption of development-boosting technologies. Faced with these factors, can policy make any difference? The authors give a “cautious” yes: “long-term history, while very important, is not a deterministic straightjacket.” An interesting read on related themes is an NBER paper I reviewed last year arguing that intermediate genetic diversity within populations best propels development.
- Global Growth Assessment: A new Global Economic Prospects report from the World Bank is hardly a shock: the world economy remains lackluster, with the Eurozone crisis posing further downside risk. In the developing world, the Bank foresees growth of 5.3 percent this year and about 6 percent in 2013 and 2014, down from the last two years. U.S. growth should climb toward 3 percent over the same period—not bad for the industrialized world. Many emerging economies face headwinds such as debt, inflation, current account deficits, and plummeting financing from besieged European banks. A New York Times piece, citing a Bank official, says that “capital flows to developing countries fell an astonishing 44 percent from April to May.” In this context, the Bank urges countries to adopt policies focused less on short-term swings and more on “medium-term domestic considerations.”
- Poverty’s Profile: Following new poverty statistics released by the World Bank in February, an Institute for Development Studies paper examines the global distribution of poverty. Using a $1.25-per-day standard, the paper shows that 74.3 percent of the poor live in middle-income countries versus 25.7 percent in low-income ones. India and China, both considered middle-income, contain 34.5 and 14.0 percent of the world’s poor respectively. More broadly, 86.6 percent of the poor live in just 20 countries, 10 low-income and 10 middle-income. As the paper notes, poverty’s persistence in growing economies raises questions of distribution and inequality. There is evidence that “the incomes of the poorest may increase less than proportionately with growth.” Isobel Coleman reviewed the new global poverty statistics on the blog in March.
- Venezuela After Chavez: A pair of pieces chronicles the uncertainty roiling Venezuela as cancer-stricken President Hugo Chavez fights for re-election and his life. Both articles, in the New York Times and the Washington Post, emphasize Chavez’s apparent refusal to plan for his possible demise. As the Post piece notes, Chavez “is the only one authorized to speak publicly about his cancer,” and he maintains that all is well. “Soon, we’ll be playing baseball,” he told a recent rally. According to the Times article, opposition leaders hope for a messy struggle among Chavez’s potential successors. Polls show Chavez ahead of his opponent for October’s election, but some contend his “less charismatic disciples” could be beat. Meanwhile, a Foreign Policy piece condemns Chavez’s Bolivarian revolution for inspiring an erosion of democracy in Bolivia and Ecuador.
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